Total revenues were up 38% for the second quarter (three months ended June 30) compared to Q2 2019, and up 63% year to date, the company reported.
Meeting demand for GoodWheat
The company launched its reduced-gluten flour, GoodWheat, in limited quantities at the beginning of 2020 and quickly sold out as home baking starting to become a popular household activity during the pandemic.
According to Nielsen sales data, consumers spent 126% more on flour in March and 105% more in April this year as compared to 2019.
Although the company wasn’t able to take full advantage of the explosion in home baking caused by quarantine measures and restaurant closures due to supply constraints, it does expect the business to be “net positive” by the end of this year as the company activates new distribution agreements in the US, China, Israel, and Europe, said Plavan.
“Although it is true that we are 30 to 90 days behind in our original target dates for completion of definitive agreements… we're actively preparing for and advancing into these channels in parallel with the finalization of our definitive agreements in order to begin generating revenues as soon as possible,” he said.
Milled from a unique variety of non-GMO wheat grown in the western US, the flour delivers increased fiber (10g), resistant starch (containing up to 94% amylose compared to 25-30% amylose in tradition wheat), reduced allergenic gluten, improved protein quality, and reduced calories compared to conventional wheat flour, according to the company.
"We talk mostly about the nutritional value of its high amylose to reduce gluten and low allergenicity profile but what's more is the way it tastes. It's truly delicious and exceptionally flavorful especially in pastas where the high amylose results in an al dente presentation," said Plavan.
In the US, the company announced a partnership with North Dakota-based Three Farm Daughters, a majority female-owned food company targeting moms who care about wholesome nutrition for their families, to introduce GoodWheat flour on the brand’s direct-to-consumer channel.
“Via this partnership our GoodWheat ingredients will be introduced in a number of food forms beginning with the introduction of high fiber, reduced calorie, reduced gluten, 100% wheat flour this fall,” said Plavan.
“Together we are developing a line of food products and snacks (such as flours, pastas, and crackers) that will offer delicious improved nutritional benefits rather than the empty calories offered by many wheat-based foods.”
GoodHemp battles regulatory and supply chain challenges
Plavan noted that the company will substantially expand its GoodHemp business – a commercial pipeline of hemp seed varieties – with the pending acquisition of Industrial Seed Innovation, which will include the addition of new hemp seed varieties, Umpqua and Rogue.
However, he added that Arcadia Biosciences, and the industry at large, has struggled to keep up with the gold rush of demand spurred by the passage of the 2018 Farm Bill.
“Without a doubt overall hemp seed sales in the US have not kept pace with the broad expectations that were established at the time of the 2018 Farm Bill nor as recently as the beginning of this year,” he said.
The absence of regulatory oversight from the FDA resulting in unsubstantiated health claims and “egregious mislabeling” has significantly hampered growth for the industry, said Plavan.
Additionally, many hemp farmers still have a surplus of seed from 2019 to sell, he said.
“These growers are mostly in the west and the Pacific northwest. Most of these growers will not buy additional seed until they have disposed of their existing biomass,” noted Plavan.
Many of these farmers, he said, intend to grow hemp seed in 2021, especially if FDA provides greater regulatory clarity.
“It is clear to us that the establishment by the FDA of a regulatory framework will cause an immediate and catalytic ramp in hemp seed sales in the US as growers gain better visibility into offtake of their crops,” added Plavan.
Headwinds ease up in 2021, predicts CEO
Looking to next year, Plavan said, "We believe the probability that these headwinds will largely dissipate by 2021 is reasonably positive” and that “the prospect of reaching quarterly profitability by year's end remains realistic."